How Working Remotely Could Affect Your Taxes
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Here's your money briefing for Tuesday, March 29th. I'm J.R. Whelan for The Wall Street Journal. It's tax week on the show, our week-long look at some of the more complex tax issues of the season. Today, remote work. Working from home or working a hybrid schedule is here to stay, at least for the foreseeable future. But it also puts responsibility on the taxpayer to accurately report where and when they spent time working last year.
If you are an employee and you're working in two places, you really need to go to your payroll department and talk to them because they will need to report to different states where you worked and what kinds of taxes were held. And so this is not just a decision you make on your own. If you're an employee, you have to do it sort of talking to your company payroll department.
WSJ tax reporter Laura Saunders has been our point person for keeping up with the rules around remote work and your taxes. We'll ask her what taxpayers need to know as they prepare their returns after the break.
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Was your kitchen table your makeshift office last year? Did you start going back to the actual office a few days a week? In either case, the IRS wants to know. It turns out where you worked can make a difference in how much you'll pay in taxes. And it stirred up a lot of confusion among taxpayers. WSJ tax reporter Laura Saunders has been following the rules governing remote work since the early days of the pandemic. And she joins me now with more. Hey, Laura, thank you so much for being with us.
Well, thank you for having me.
You know, Laura, people began working remotely as a result of the pandemic right around this time in 2020. And you were with us last year talking about how tax laws tried to address that. How did things change from the tax law standpoint in 2021?
Well, I don't think they changed very much at all. What's happened is that people have continued to work at home and companies have to address this. And so it's important to pay attention to. Anytime you're working in two places, whether it's in two states is very important, but also it could be that your office is in a city and that you're working two counties away in the same state. You might have issues where you don't know if you owe city taxes or not. Certainly, if you're working in two states, you could possibly owe taxes to two states unless maybe there's a reciprocity agreement. You know, sometimes Kansas City, Kansas and Kansas City, Missouri will have, you know, an exchange agreement or something like that.
A number of states enacted temporary laws during the pandemic that were focused on people who were working in that state, but their offices were someplace else. Those have mostly lapsed. And that's what's happened in that way. These are just all very important issues.
You know, a year ago, this was all something new, but it seems like there are less opportunities to get around this. And you told us before how more and more states are realizing they need to take this up.
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